How to Get Tax Help and Avoid IRS Tax Liens

If you've been unable to pay all your taxes in the past few years, you could be facing a tax lien, which essentially gives the IRS the right to your assets, including any real estate you own. However, there is professional tax help available to avoid IRS tax liens.


How to Get Tax Help and Avoid IRS Tax Liens

Pay Your Taxes in Full and on Time

Of course, the best way to avoid a tax lien is to always fully pay your taxes on time. Not getting into tax debt in the first place is the key to staying off the IRS' radar. Certainly, there are times when you may be unable to pay your taxes in full, but if at all possible, your taxes should be the first debt you pay to avoid getting in trouble with the IRS in the first place.


Don't Ignore IRS Notices

Even though paying your taxes in full is guaranteed to allow you to avoid a tax lien, that advice is no help if you're already behind on your taxes. So, let's look at how to keep you from getting a tax lien if you already have a tax debt. The first and most important rule to avoid a tax lien is to never ignore any notices sent to you by the IRS, which will always arrive via U.S. mail.


If you owe the IRS money, you will receive a notice in the mail informing you of this debt. There will be a "respond by" date that you need to adhere to if you want to stay in the IRS' good graces. This "respond by" date is the date by which you need to contact the IRS to initiate a resolution to your debt. There are several options available to deal with your tax debt and avoid a tax lien.


Make Payments On Time

Once you find a resolution to your tax debt, you'll probably have payments to make, either as part of an installment plan or an offer-in-compromise payoff plan. These agreements to pay your debt are legally binding, so you need to keep your end of the bargain by making your installments on time. If you're unable to make a payment, be sure to contact the IRS immediately to let them know, or talk to a tax professional for help.


What Is a Tax Lien?

To understand why it's important to avoid a tax lien, you first need to know what a federal tax lien is and how it can affect your life. A federal tax lien is the IRS' claim on your property that they can seize and sell to satisfy your tax debt. A lien can be placed on anything you own, including real estate (your house and land), financial assets, and personal property, like vehicles and other large ticket items.


A tax lien is not the same as a tax levy, but a lien can lead to a levy. If you ignore your tax debt or fail to make payment arrangements, the IRS can file a tax levy, which is the actual seizure of your property that they will sell to settle your tax debt. The IRS will send you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing before actually seizing it.


Impact of a Tax Lien

Not only does a federal tax lien allow the government to claim your property to satisfy your tax debt, but it also affects you in other ways. First, any property you acquire during the lien period (until you fully pay your taxes) will be subject to the lien. So, if you buy a new car while there is a tax lien on your IRS account, it automatically becomes the property of the government until you pay off your debt.


When the IRS files a lien on your property, it also files a public Notice of Federal Tax Lien with your creditors, which may affect your ability to get credit until you pay off your debt. Even if you file for bankruptcy, your tax lien may not go away and can be attached to any future purchases. This is because tax debt can usually not be discharged through a bankruptcy and will remain a debt you owe.


A tax lien can also prevent you from selling your property, since any money that would come from the sale would be turned over to the IRS to satisfy your tax debt. Refinancing a mortgage becomes a struggle as well because you're essentially selling your property and rebuying it with a new loan during a refinance process. There are ways, however, to sell your property even under a tax lien, but you'll likely need help from a tax professional.


Getting Help With a Tax Lien

Federal tax liens can be very difficult to deal with, especially if you're not able to pay your tax debt in full. There are ways to get a tax lien released from your property even if you still owe the IRS money. However, you'll probably need help from a tax professional to get it done. This is because the IRS doesn't release liens unless very specific criteria are met, some of which may require an application and explanation.


One way to get a tax lien released from your property is to pay your debt down to under $25,000. A tax professional can help you determine the best way to do that, either through an installment plan, with an offer-in-compromise, or through transferring some of your debt to a home equity line of credit or a credit card. While owing these entities may result in higher interest, it may be better than owing the IRS a tax debt.


Credit reporting agencies are no longer allowed to include a federal tax lien on your credit report, which can help keep your credit score high, but the lien is a matter of public record, so creditors may be leery of extending your credit anyway. A tax professional can advise you on how to access credit while you have a tax lien on your property. It may involve contacting the IRS for subordination or discharge of property tax lien withdrawal.


Timeline for a Federal Tax Lien

There is a specific process the IRS follows when filing a tax lien on a property. You will first receive a notice and demand for payment about six weeks after you file a return. The IRS will usually send two of these notices before moving to a lien. If you ignore these notices and don't contact the IRS to make payment arrangements, you'll receive a Notice of Federal Tax Lien.


If you still do nothing, the IRS will send a Notice of Intent to Levy and finally, a notice of your right to a Collection Due Process hearing. At this point, it may be difficult to avoid having your assets seized, but there still may be help available by contacting a tax specialist who will intervene with the IRS on your behalf.


Liens and levies are serious business, but they don't have to take over your life. A tax professional can provide assistance in getting a lien removed to allow you to regain control of your property. Contact Tax Alliance today to discover how we can get your lien released and your tax debt settled.


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